Opinion
No. CV-07-4007820-S
June 26, 2007
MEMORANDUM OF DECISION RE PLAINTIFF'S APPLICATION FOR TEMPORARY INJUNCTION AND ORDER TO SHOW CAUSE #101
ISSUE
The issue before the court is whether to enjoin the defendant from proceeding to arbitration. The application for a temporary injunction is granted to the plaintiff because there is probable cause to believe that the employment contract containing the arbitration clause was not renewed since its expiration.
FACTS
On March 26, 2007, the plaintiff, Diagnostic Oncology CRO, Inc., submitted a verified complaint seeking a temporary injunction to prohibit the defendant, Robert Ballas, from proceeding to arbitration. In the verified complaint, the plaintiff alleges the following facts. The defendant was employed by the plaintiff from January 1, 2002 to December 31, 2006, as a project manager for medical device clinical trials. In 2001, the parties signed a consulting and confidentiality agreement, which was for a short term of consultancy, commencing on November 11, 2001 and terminating on January 1, 2002. In 2002, the defendant and Orion Laboratories, Inc., a wholly owned subsidiary of the plaintiff, signed an employment agreement. In accordance with Article 5A of the 2002 contract, the contract term was one year, commencing on January 1, 2002 and terminating on December 31, 2002 and it was renewable only upon the mutual agreement of Orion Laboratories and the defendant. In 2003, the plaintiff and the defendant signed an employment contract (2003 contract) for a one-year term. The 2003 contract expired on December 31, 2003 and was renewable only upon the mutual agreement of the parties. In 2004, the parties did not renegotiate the 2003 contract, nor did they enter into any other contract for employment. The defendant continued, however, to work for the plaintiff from January 1, 2004 until December 31, 2006. On February 13, 2007, the defendant submitted to the American Arbitration Association a demand to arbitrate, claiming that in 2004, 2005 and 2006, the plaintiff failed to pay him a bonus pursuant to Article 3 of the 2003 contract; that the plaintiff failed to pay him severance pursuant to Article 5(B) of the 2003 contract; and that in December 2006, the plaintiff terminated his employment in violation of Article 5(D) of the 2003 contract. On May 7, 2007, the plaintiff filed a memorandum in support of their application for temporary injunction, and the defendant filed a memorandum in opposition.
DISCUSSION
"The principal purpose of a temporary injunction is to preserve the status quo until the rights of the parties can be finally determined after a hearing on the merits." (Internal quotation marks omitted.) Rustici v. Malloy, 60 Conn.App. 47, 56, 758 A.2d 424, cert. denied, 254 Conn. 952, 762 A.2d 903 (2000). "A party seeking injunctive relief has the burden of alleging and proving irreparable harm and lack of an adequate remedy at law." (Internal quotation marks omitted.) Maritime Ventures, LLC v. Norwalk, 277 Conn. 800, 807, 894 A.2d 946 (2006). "The allegations and proof are conditions precedent to the granting of an injunction." (Internal quotation marks omitted.) Clark v. Gibbs, 184 Conn. 410, 419-20, 439 A.2d 1060 (1981). "If a party demonstrates both of those elements, a court may exercise its discretion to issue an injunction." Hackbarth v. Hackbarth, 62 Conn.App. 490, 499, 767 A.2d 1276, cert. denied, 256 Conn. 916, 773 A.2d 944 (2001).
"A prayer for injunctive relief is addressed to the sound discretion of the court and the court's ruling can be reviewed only for the purpose of determining whether the decision was based on an erroneous statement of law or an abuse of discretion. . . Therefore, unless the trial court has abused its discretion, or failed to exercise its discretion. . . the trial court's decision must stand." (Internal quotation marks omitted.) Maritime Ventures, LLC v. Norwalk, supra, 277 Conn. 807-08. "[T]he trial court. . . must determine, in light of its assessment of the legal issues and the credibility of the witnesses, whether a plaintiff has sustained the burden of showing probable cause to sustain the validity of its claim." (Internal quotation marks omitted.) Nash v. Weed Duryea Co., 236 Conn. 746, 749, 674 A.2d 849 (1996).
There is a four-part test for the issuance of a temporary injunction. "In order for a [temporary injunction] to issue, [the trial court] must determine that: (1) the plaintiff has no adequate legal remedy; (2) the plaintiff would suffer irreparable injury absent a [temporary injunction]; (3) the plaintiff [is] likely to prevail [at trial]; and (4) the balance of the equities favor[s] a [temporary injunction]. Waterbury Teachers Association v. Freedom of Information Committee, CT Page 11372 230 Conn. 441, 446, 645 A.2d 978 (1994)." DeBisshop v. Town of Oxford, Superior Court, judicial district of Ansonia-Milford, Docket No. CV 06 4006416 (September 26, 2006, Robinson, J.).
"No temporary injunction may be granted. . . until the party making application therefor gives bond, with surety satisfactory to the court or judge granting the injunction, to the opposite party, to answer all damages in case the plaintiff fails to prosecute the action in which the injunction is applied for to effect. . ." General Statutes § 52-472. Nonetheless, "a bond need not be required when, for good cause shown, the court or a judge is of the opinion that a temporary injunction ought to issue without bond." General Statutes § 52-472.
The plaintiff requests that this court enjoin the defendant from proceeding to arbitration on the ground that the dispute between the parties is not subject to binding arbitration because there is no written agreement by the parties to arbitrate those issues identified in the defendant's demand for arbitration. It also argues that, without an injunction, it would suffer irreparable harm in that it would have to arbitrate claims that it did not agree to arbitrate. It further argues that it has no adequate remedy at law in that any statutory remedies would not address the issue of whether the parties agreed to arbitrate these issues.
The defendant counters that an injunction to stay arbitration should not be awarded because the facts of this case support the finding that the 2003 contract containing an arbitration provision was renewed and in full force and effect through December 31, 2006. He argues that, after he demanded incentive salary payments for 2004 and 2005 pursuant to the 2003 contract, Thomas Soriano, president of the plaintiff, terminated his employment in retaliation and in an effort to avoid paying him those payments. In addition, he argues that federal and Connecticut arbitration law supports the denial of this application in that: (1) public policy of Connecticut and federal jurisprudence favors arbitration; (2) an arbitration clause constitutes a separate contract apart from the underlying contract; (3) the arbitration clause in the 2003 contract is broad in scope as it mandates that arbitration be the forum in which any and all disputes arising out of the underlying contract are resolved; and (4) the rules of the American Arbitration Association permit the arbitrators to determine the issue of arbitrability.
A. Jurisdiction on the Issue of Arbitrability
The defendant argues that, in light of the broad language of the arbitration clause in the 2003 contract, the issue of arbitrability should be decided by arbitrators rather than by the court. The plaintiff counters that whether a dispute is arbitrable is a question for the court unless the parties have agreed to arbitrate that question.
"Whether a particular dispute is arbitrable is a question for the court, unless, by appropriate language, the parties have agreed to arbitrate that question, also." (Internal quotation marks omitted.) White v. Kampner, 229 Conn. 465, 472, 641 A.2d 1381 (1994). "[T]he issue of arbitrability may only be referred to the arbitrator if there is `clear and unmistakable' evidence from the arbitration agreement. . . that the parties intended that the question of arbitrability shall be decided by the arbitrator. . . Bell v. Cendant Corp., 293 F.3d 563, 566 (2d Cir. 2002)." (Internal quotation marks omitted.) Computerized Vehicle Registration v. General Systems Solutions, Inc., Superior Court, judicial district of New London, Docket No. CV 4006274 (November 8, 2006, Leuba, J.T.R.). "The intention to have arbitrability determined by an arbitrator can be manifested by an express provision or through the use of broad terms to describe the scope of arbitration, such as `all questions in dispute and all claims arising out of' the contract or `any dispute that cannot be adjudicated.' " (Internal quotation marks omitted.) White v. Kampner, supra, 229 Conn. 472.
"[A]n argument that the contract does not exist can't logically be resolved by the arbitrator (unless the parties agree to arbitrate this issue after the dispute arises)." (Internal quotation marks omitted.) C.R. Klewin Northeast, LLC v. Bridgeport, 282 Conn. 54, 81, 919 A.2d 1002 (2007). "[B]ecause an arbitrator's jurisdiction is rooted in the agreement of the parties. . . a party who contests the making of a contract containing an arbitration provision cannot be compelled to arbitrate the threshold issue of the existence of an agreement to arbitrate. Only a court can make that decision." (Internal quotation marks omitted.) Nussbaum v. Kimberly Timbers, Ltd., 271 Conn. 65, 72-73, 856 A.2d 364 (2004).
In the present case, the arbitration clause in the 2003 contract is indeed broad in scope since it encompasses "any controversy, claim or dispute" arising out of the 2003 contract. The plaintiff claims, however, that there has been no binding contract or arbitration clause to compel the plaintiff to participate in the arbitration proceeding. The plaintiff contests, inter alia, that the 2003 contract containing the arbitration provision was renewed or in effect after it expired on December 31, 2003. Accordingly, this court concludes that, under such circumstances, the issue of arbitrability should be decided by the court.
B. Renewal of the Employment Contract
The key issue in the present case is whether the 2003 contract was renewed after its expiration. The plaintiff argues that, after the 2003 contract expired, the defendant became an at-will employee and his employment was governed only by the plaintiff's policies and procedures including the terms and conditions set forth in the employee handbook.
The defendant counters that the evidence shows that the 2003 contract was renewed orally. He argues that Article 5A of the 2003 contract allows for its renewal without regard to whether it is renewed orally or in writing. He also argues that, from January 1, 2004 to December 31, 2006, the plaintiff continued to employ the defendant under the terms and conditions of the 2003 contract since the plaintiff failed to change the defendant's benefits and the level of compensation. He indicates that there has been no other contract between the parties from July 24, 2004 through December 31, 2006. He also argues that the plaintiff's past practice and conduct have been to offer written contracts to employees at-will, but that the plaintiff did not draft, propose or negotiate an at will employment contract with the defendant. He further argues that the fact that the plaintiff failed to comply with the employee handbook in terminating the defendant's employment since there was no progressive discipline process indicates that he was not employed under the terms in the employee handbook.
"A contractual promise cannot be created by plucking phrases out of context; there must be a meeting of the minds between the parties. See Bridgeport Pipe Engineering Co. v. DeMatteo Construction Co., 159 Conn. 242, 246, 268 A.2d 391 (1970). . . In order to support contractual liability, the defendants' representations must be sufficiently definite to manifest a present intention on the part of the defendants to undertake immediate contractual obligations to the plaintiff." (Citations omitted; internal quotation marks omitted.) Burnham v. Karl Gelb, P.C., 50 Conn.App. 385, 389, 717 A.2d 811 (1998).
"A contract implied in fact, like an express contract, depends on actual agreement. . ." (Internal quotation marks omitted.) Chotkowski v. State, 240 Conn. 246, 268 n. 26, 690 A.2d 368 (1997). To show the existence of an implied employment agreement, the employee must prove that "[the employer] had agreed, either by words or action or conduct, to undertake [some] form of actual contract commitment to him. . ." (Internal quotation marks omitted.) Torosyan v. Boehringer Ingelheim Pharmaceuticals, Inc., 234 Conn. 1, 15, 662 A.2d 89 (1995).
"An implied employment contract may be enforceable under the doctrine of promissory estoppel in order to avoid injustice to an employee who has detrimentally relied on a clear and definite promise which a promisor could reasonably have expected to induce reliance by the promisee." (Internal quotation marks omitted.) Pavliscak v. Bridgeport Hospital, 48 Conn.App. 580, 593, 711 A.2d 747, cert. denied, 245 Conn. 911, 718 A.2d 17 (1998). Under the doctrine of promissory estoppel, "the promise must reflect a present intent to commit as distinguished from a mere statement of intent to contract in the future. . . [A] mere expression of intention, hope, desire, or opinion, which shows no real commitment, cannot be expected to induce reliance. . . and, therefore, is not sufficiently promissory. The requirements of clarity and definiteness are the determinative factors in deciding whether the statements are indeed expressions of commitment as opposed to expressions of intention, hope, desire or opinion." (Citations omitted; internal quotation marks omitted.) Stewart v. Cendant Mobility Services Corp., 267 Conn. 96, 105-06, 837 A.2d 736 (2003).
In the present case, Article 5A of the 2003 contract provides that the employment contract "may be renewed upon the mutual agreement" of the parties. The question is whether there was a mutual agreement between the parties to renew the 2003 contract. The evidence submitted by the parties shows that, throughout 2006, Soriano and Brian Voyce, a member of the plaintiff's board of directors, failed to respond to the defendant's numerous requests to renegotiate the 2003 contract and that, after December 31, 2003, there was no notice or correspondence showing that the defendant was no longer under the 2003 contract or that he was instead an employee at will. The court finds, however, that the defendant's argument that, on July 19, 2006, Voyce told him over the phone that the 2003 contract was in full force and effect is not supported by the evidence. The evidence merely shows that the plaintiff failed to deny the defendant's unilateral assumption that the 2003 contract was renewed, which the defendant indicated in about fifteen emails sent to Soriano and Voyce from March 26, 2006 to December 29, 2006, requesting to renegotiate his employment contract. Indeed, when the defendant requested more than ten times that the plaintiff pay his incentive compensation for 2004 and 2005, Voyce or Soriano did not deny the effectiveness of the 2003 contract even if they could have put to an end the plaintiff's requests simply by pointing out that the 2003 contract terminated on December 31, 2003. The plaintiff's failure, however, to deny the effectiveness of the 2003 contract in the negotiation process does not show its definite intent to undertake some contractual commitment to the defendant although it may show the plaintiff's intent to contract in the future. Accordingly, based on the evidence produced by the parties, this court finds that there is probable cause to believe that there was no actual agreement between the parties on the renewal of the 2003 employment contract because there was no expression of commitment on the part of the plaintiff.
C. Arbitrability of the Defendant's Claims
"Although the courts of this state encourage arbitration as a means of alternative dispute resolution, there are limits to this policy." Scinto v. Sosin, 51 Conn.App. 222, 227, 721 A.2d 552 (1998), cert. denied, 247 Conn. 963, 724 A.2d 1125 (1999). "[A]rbitration is a creature of contract. . . [A] person can be compelled to arbitrate a dispute only if, to the extent that, and in the manner which, he has agreed so to do. . . No one can be forced to arbitrate a contract dispute who has not previously agreed to do so." (Internal quotation marks omitted.) State v. Philip Morris, Inc., 279 Conn. 785, 796, 905 A.2d 42 (2006). "If the dispute is whether the contract which contains the [arbitration] clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission [to arbitration]." Batter Building Materials Co. v. Kirschner, 142 Conn. 1, 9, 110 A.2d 464 (1954).
The defendant cites Nussbaum v. Kimberly Timbers, Ltd., supra, 271 Conn. 65, to support its argument that, even if the 2003 contract lapsed after December 31, 2003, the termination of the contract does not destroy the defendant's right to proceed to arbitration because, irrespective of the enforceability of the underlying contract, an arbitration clause constitutes a separate and distinct agreement. In that case, the court dealt with the issue of whether the plaintiffs' claim that the contract is unenforceable because of the defendant's failure to comply with statutory requirements is a claim `arising out of or relating to' the contract and, thus, is an issue to be decided by the arbitrator. Id., 74. The court held that "because the arbitration agreement is separate and distinct from the underlying contract. . . and because the plaintiffs' claim that the contract is unenforceable does not pertain to the validity of the arbitration agreement itself, the claim plainly falls within the scope of the arbitration agreement and must be decided in the first instance by the arbitrator." (Citation omitted.) Id., 78.
Nussbaum is, however, inapposite to the facts of the present case in that, in the present case, the plaintiff's claim pertains to the validity of the arbitration agreement itself. The court in Nussbaum addressed this specific issue in distinguishing that case from International Brotherhood of Teamsters v. Shapiro, 138 Conn. 57, 60, 65, CT Page 11377 82 A.2d 345 (1951) (holding that duress in formation of contract can render arbitration agreement void). The court stated that in Shapiro, "the company's claim of duress alleged a lack of mutual assent to the terms of the underlying contract that implicated the arbitration provision, whereas [in Nussbaum] the defendant's alleged omission of the statutorily required notice provisions in the. . . contract merely constitutes a possible defect in the contract's substantive terms that does not suggest the lack of an agreement to arbitrate." Id., 77. The present case is more analogous to Shapiro than it is to Nussbaum because the plaintiff's claim that the 2003 contract was not renewed suggests the lack of an agreement to arbitrate.
In the present case, Article 14 of the 2003 contract provides in relevant part that: "The parties will use their best efforts to resolve amicably any dispute arising out of or relating to this Employment Agreement. Any controversy, claim or dispute that cannot be so resolved shall be settled by final binding arbitration in accordance with the rules of the American Arbitration Association. . ." Although the language of the arbitration clause is very broad, the defendant's claims against the plaintiff are premised on the threshold issue of whether the 2003 contract containing the arbitration clause was renewed after its one-year term expired. Thus, the arbitration clause cannot be enforced as a separate agreement apart from the 2003 contract. Furthermore, this court has already found that there is probable cause to believe that the 2003 contract containing the arbitration agreement has not been renewed. Accordingly, this court concludes that there is probable cause to believe that there was no agreement to arbitrate the defendant's claims, and, therefore, those claims are not arbitrable.
CONCLUSION
For the foregoing reasons, the court finds that the plaintiff is likely to succeed on the merits of its claim that the issues identified in the defendant's demand for arbitration are not arbitrable. The court also finds that requiring the plaintiff to participate in the underlying arbitration and subjecting it to the discovery process therein will cause irreparable harm, for which there is no adequate remedy at law. The court further finds that the balance of equities weighs in favor of issuing a temporary injunction to maintain the status quo until a full hearing on the merits may be had. Accordingly, the court grants the temporary injunction without bond to enjoin the defendant from proceeding to arbitration.